Demant's (CPH:DEMANT) earnings trajectory could turn positive as the stock grows 4.2% this past week

Most people feel a little frustrated if a stock they own goes down in price. But sometimes broader market conditions have more of an impact on prices than the actual business performance. Over the year the Demant A/S (CPH:DEMANT) share price fell 14%. However, that's better than the market's overall decline of 30%. The silver lining (for longer term investors) is that the stock is still 9.1% higher than it was three years ago.

While the stock has risen 4.2% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

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To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Unhappily, Demant had to report a 1.4% decline in EPS over the last year. The share price decline of 14% is actually more than the EPS drop. This suggests the EPS fall has made some shareholders more nervous about the business.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

Dive deeper into Demant's key metrics by checking this interactive graph of Demant's earnings, revenue and cash flow.

A Different Perspective

While it's never nice to take a loss, Demant shareholders can take comfort that their trailing twelve month loss of 14% wasn't as bad as the market loss of around 30%. Longer term investors wouldn't be so upset, since they would have made 0.8%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Demant , and understanding them should be part of your investment process.

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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Danish exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.